The weekly newspaper for air cargo professionals Volume: 19
Issue: 45 14 November 2016
“Surprising surge” in September for European airports
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reight traffic at European airports rebounded at the strongest rate since May 2011, with a “surprising surge” in September of 7.9 per cent, Airports Council International (ACI) Europe
says. Freight grew 4.1 per cent in the third quarter, helped by the September surge, and was up 2.6 per cent on a year-to-date basis. ACI says growth came both from inside the European Union and outside. The four largest airports in Europe, Frankfurt Airport, Paris Charles de Gaulle Airport (pictured), Amsterdam Airport Schiphol and London Heathrow Airport all registered strong growth in September. Paris was up 5.2 per cent to 172,000 tonnes and Frankfurt by 6.2 per cent to 170,225 tonnes. Amsterdam had the smallest increase among the top four, but was still up 1.9 per cent to 140,209 tonnes, and Heathrow grew 5.9 per cent to 126,109 tonnes. ACI Europe director general, Olivier Jankovec says: “Last week’s announcement of Ryanair setting up a base at Frankfurt airport undoubtedly marks a turning point for European air travel.”
60 SECONDS WITH DR LUDWIG BERTSCH SECOND TURKISH FLIGHT GIVES BILLUND A BOOST CHRISTMAS LOOKING ROSIER WITH YIELD UPTICK
“Along with long haul low cost, these disruptive forces are pointing towards increasing airport competition and a more hybrid airport market. The traditional segmentation between mega hubs, secondary hubs, medium-sized airports and smaller regional airports is blurring.” Between January and September, freight volumes across Europe were up 2.6 per cent, with the top four registering growth of between one and four per cent.
Frankfurt was up one per cent to 1.48 million tonnes, followed by Paris growing 4.2 per cent to 1.44 million tonnes. Amsterdam grew by 1.6 per cent to 1.21 million tonnes and Heathrow was up 2.1 per cent to 1.12 million tonnes. Frankfurt Airport’s operator, Fraport released its nine month results on 3 November. Revene dipped by 0.4 per cent to €1.9 billion ($2.1 billion) and profits were down 8.7 per cent to €238.8 million.
ABC to become Oslo’s third new freighter flight in a month
AirBridgeCargo Airlines (ABC) is to become the third airline to start freighter services to Oslo in a month with twice-weekly Boeing 747 Freighter flights to support Norway’s seafood export market and oil & gas industry. The first flight will leave on 15 November and will operate on Tuesdays and Fridays. Norway exports 220,000 tonnes of seafood a year, 600 tonnes a day using air cargo services to Asia and North America, and ABC says its new ser-
FIRST OPENAP MEETING HELD IN ABU DHABI
vice will give exporters seamless access to its network in both North America and Asia Pacific via its Moscow Sheremetyevo International Airport hub. ABC vice president EMEA, Georges Biwer says: “The fast connections and on-time performance ABC offers via its Moscow Sheremetyevo hub, as well as the temperature-control capabilities of our modern Boeing 747-8F fleet, means we can offer exporters the network and service options they need to continue to grow their business all over the world.” Oslo Airport director cargo – traffic development, Martin Langaas adds: “The Norwegian airfreight market is growing by over 10 per cent annually, making it the largest air cargo market in the Nordics. The Norwegian market for seafood exports alone is expected to grow by 500 per cent within the next 20-30 years.”
“To reach this predicted growth, it’s essential to attract high quality carriers like AirBridgeCargo to OSL to connect Norway with its most important markets in Asia and North America.” ABC joins Emirates SkyCargo and Cargolux Airlines International in starting Oslo services. Emirates started weekly Oslo - Dubai flights using a Boeing 777 Freighter on 12 October, providing 100 tonnes of capacity, in addition to its five weekly 777-300ER passenger services with 175 tonnes bellyhold capacity. The 777F service will fly to its Emirates SkyCentral hub at Dubai World Central (DWC), providing worldwide access via DWC or Dubai International Airport. Cargolux added weekly 747-8F flights from Oslo to Luxembourg on its flight C85022 from New York on 1 November.
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ABX labour dispute goes to arbitration THE labour dispute between ABX Air and pilot employees represented by the International Brotherhood of Teamsters (IBT) is to go to arbitration, a court has ruled. Judge Timothy S. Black of the US District Court for the Southern District of Ohio ruled that the dispute between Air Transport Services Group’s cargo airline and pilot employees represented by the IBT is a minor dispute under the Railway Labor Act and should be resolved through the grievance and arbitration process contained in the parties current labour agreement. ABX Air president, John Starkovich says: “We welcome the opportunity to work with the pilots’ union in ensuring that our pilots maintain scheduling flexibility while at the same time ensuring that ABX Air has sufficient flight crews available to meet the needs of its customers.” Starkovich says the airline will continue discussing with the IBT about resolving differences over pilots’ ability to determine compensatory time for extra flying at premium pay levels versus ABX’s need to adequately crew its freighter aircraft with pilots during the peak holiday period.
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NEWSWEEK Amazon start up costs hit Atlas Air results
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tlas Air made a loss of $7.5 million in the third quarter of 2016 mainly due to the costs of setting up online retailer, Amazon’s freighter operations. In May, Atlas announced it would provide Amazon with 20 Boeing 767-300s with a lease term of 10 years to help the online retailer set up its own freighter operations, to be fully operational by 2018. Nine month profits were down to $13.1 million from $44.8 million in 2015, which was also due to the Amazon start up costs, and 2015 had benefitted from the US West Coast seaport strike. Atlas Air president and chief executive officer, William Flynn says: “We placed our first aircraft into service for Amazon in August, and we moved forward with preparations to ramp up to 20 by the end of 2018. We also made significant progress toward
integrating Southern Air and the two new operating platforms that it adds.” He adds: “We continue to believe strongly in the future of airfreight, express and e-commerce, and we are shaping Atlas to make the most of that future - through the quality and scale of our fleet, through the efficiency of our operations, and through the strength of our business relationships.” Atlas Air also signed an agreement with
FedEx Express to provide five Boeing 747400 Freighters from the beginning of 2017 through to 2021. Flynn says: “We have worked closely and successfully with FedEx for many years, with an agreement to provide five aircraft for 2016 peak-season flying already in place. This new agreement will enable both of our companies to better plan for the longer term.”
MAB flies to Guangzhou
MAB Kargo has launched a second new freighter route to Eastern China in the space of a week with flights to Guanghzou. The Malaysian cargo carrier started operating twice weekly service to Guanghzou Baiyun International Airport from Kuala Lumpur International Airport on 8 November. MAB is operating an Airbus A330 Freighter on the route, offering 60 tonnes of cargo capacity and says it is launching the route to tap into the increasing movements between Guangzhou, China’s third busiest hub and Kuala Lumpur. The A330 service is set to see carry mainly perishables, especially seafood as well as general cargo. The carrier expanded its Chinese network with two freighter flights a week to Chongqing Jiangbei International Airport from 30 October – mainly carrying high value electronic goods. MAB Kargo, the cargo arm of Malaysia Airlines, is restructuring its freighter fleet and is retiring its Boeing 747 Freighter and is concentrating solely on operating A330Fs. Alongside Guanghzou and Chongqing, its freighter network also includes Hong Kong International Airport, Shanghai Pudong International Airport and Zhengzhou XinZheng International Airport.
Frankfurt freighter for Air Canada AIR CANADA CARGO has added Frankfurt to its freighter network, with Boeing 767-300 Freighter services from Toronto due to start on 19 November. The weekly 767-300F flight, operated by Cargojet through a wet lease agreement with Air Canada, is in addition to the 28 weekly widebody flights Air Canada operates between Canada and Frankfurt. Air Canada Cargo vice president, Lise-Marie Turpin says: “The growth of our freighter service allows us to increase our global reach and leverage our substantial, growing international network. It also allows us to offer main deck service to our customers with year-round capacity on key lanes.” Air Canada Cargo launched dedicated freighter routes in June, operating 767-300s between Toronto and Atlanta, Dallas, Bogota, Lima and Mexico City. Air Canada has also announced summer routes from Vancouver with daily Boeing 787-8 flights to Frankfurt on 1 June and three Boeing 767-300ER services a week London Gatwick Airport on 8 June.
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NEWS WEEK DPDHL Group profits double
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eutsche Post DHL Group’s nine month profits have doubled to €1.8 billion ($2 billion) with strong growth in all business areas. The group was helped by the Global Forwarding division returning to profit, making €183 million compared to a €280 million loss in the same nine month period of 2015. The 2015 result was affected by the €384 million one off cost of renewing the division’s IT systems. In the third quarter, Global Forwarding made a profit of €63 million compared to a €337 million loss in 2015. Airfreight volumes grew 1.5 per cent in the third quarter to 909,000 tonnes. Deutsche Post DHL Group chief executive officer, Frank Appel (pictured) says: “The strong trend in operating profit in all four divisions shows that we have set the right priorities with our Strategy 2020. We are taking an increasingly active role in the dynamic development of e-commerce all over the world and are con-
tinuing to invest in this segment.” The group is forecasting that earnings before interest and tax for the year will be between €3.4 and €3.7 billion despite predicting that the world economy will only see moderate growth. DHL Express’ nine month profits were up 3.8 per cent to €1.1 billion though were down 7.7 per cent to €336 million in the third quarter. European revenue remained highest at €4.6 billion, a 4.4 per cent improvement, followed by the Americas rising 6.6 per cent to €1.9 billion, Asia Pacific grew three per cent to €3.8 billion and the Middle East and Africa were up 1.2 per cent to €780 million. The Express division has continued to make investments expanding its hubs, particularly in Leipzig, East Midlands, Brussels and Cincinnati, while maintenance and aircraft fleet renewal represented significant investment spending. DHL says it has also been modernising and refurbishing warehouses and office buildings across its Global Forwarding Freight division.
UPS buys life science supplier Marken
UPS is to further expand into healthcare logistics with the acquisition of Marken, a provider of supply chain services to the life sciences industry. Under the deal, Marken will operate as a wholly owned subsidiary of UPS and will gain access to UPS’s global network. UPS announced expanded logistics capabilities for clinical trials in July, and its network includes temperature-sensitive storage and transportation, 24-hour
monitoring and security. UPS chief marketing and business services officer, Teresa Finley says: “Marken’s significant industry expertise and flexible network, combined with UPS’s vast integrated global air and ground networks, will provide the life sciences industry with an attractive portfolio of global logistics options.” Marken chief executive officer, Wes Wheeler says: “With UPS, we will improve our efficiency, while continuing to provide our clients with the high-touch, personalised services that they have come to expect from us.” UPS has more than 100 healthcare dedicated facilities with 60 Good Manufacturing Practices compliant locations. Shippers will have access to products including UPS Temperature True and UPS Proactive Response.
Hactl achieves IGOM certification
HONG Kong Air Cargo Terminals has become the first handler in Hong Kong to achieve IATA Ground Operations Manual (IGOM) certification. Through IGOM, the International Air Transport Association (IATA) is driving the
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adoption of a single industry ground operations manual with the goal of global standardisation of policies and procedures, a uniform minimum level of safety and standard set of policies and procedures for use in IATA Safety Audit for Ground Operations. Applying IGOM standards is expected to drive down costs by reducing the complexity associated with multiple airline ground operations manuals, standardise training requirements and reduce aircraft damage by applying common and robust procedures.
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NEWSWEEK
First OPENAP meeting held in Abu Dhabi
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ver 100 delegates met with experts from the air cargo supply chain in Abu Dhabi for the first Neutral Air Partner OPENAP Global Meeting from 25 – 28 September. The event took place at the St. Regis Saadiyat Island Resort, giving delegates the chance to meet with air cargo experts, coming together to explore partnering opportunities, jointly develop innovative air cargo products and services, and acquire knowledge from industry professionals. Neutral Air Partner (NAP) founder and chief executive officer, Christos Spyrou (pictured) presented the NAP project with a detailed overview of its objectives, member’s benefits, innovation tools and what is coming soon in the world of NAP air cargo networking. NAP’s strategic partners, Acex, AirBridgeCargo Airlines, Astral Aviation, Descartes and
OAG were also on hand to share insights with useful information regarding the challenges and future of the air cargo industry. There were two days of face-to-face meetings, with over 1,000 taking place between companies across the supply chain including sales agents, consolidators, time critical and express service firms as well as carriers. Delegates travelled from a number of countries including Argentina, China, Germany, India, Kenya, Turkey and the UK. The organisation says it has nine objectives, to inject a greater degree of advanced air cargo expertise; revive specialisation and sales focus; drive buying power across the supply chain; build competitive advantages through tailor made IT tools; empower performance and optimise results; deliver extensive knowledge through training programs and workshops; improve risk profile and cash flow management;
create the most powerful grouping of air cargo specialists; set new standards of excellence. The second OPENAP will take place from 24 – 27 September 2017.
AMI expands in Cape Town
AMI has doubled the size of its facilities in Cape Town and tripled its temperature controlled storage for perishables. It has acquired the facility adjacent to its current base at Cape Town International Airport, doubling warehousing to 1,000 square metres, including 120 square metres of refrigerated storage with separate temperature zones. The expanded facility will enable AMI to receive fresh products from South Africa’s Cape region. AMI vice president for Africa, Milton French says: “The expanded AMI Cape Town facility and our increased perishables capability will help us to keep pace with the significant growth in traffic from this region.”
KN adds San Juan to PharmaChain network KUEHNE + NAGEL (KN) is bringing its KN PharmaChain network to Puerto Rico with temperature controlled warehousing space in its San Juan facility. The facility, one mile from Luis Munoz Marin International Airport, offers cold storage from 2-8C, dry ice and gel pack capabilities to cool down temperature-controlled shipments in transit, GDP/GXP best storage and distribution practices, 24/7/365 proactive monitoring with active sensors to monitor temperature, voltage and GPS position as well as web-based shipment and temperature visibility. KN North America president and chief executive officer, Bob Mihok says: “Broadening the scope of our San Juan operation confirms Kuehne + Nagel’s commitment to exceeding the logistics needs of our global healthcare customers, many who have operations in Puerto Rico.”
The facility also includes Qualified Envirotainer Provider accreditation, gated entrance accessed by authorised personnel with badge permits only, 24 unit load device charge stations, and an electric generator dedicated for the cool zone area.
CHAMP expands scope of TGC for forwarders CHAMP Cargosystems has extended the scope of its Traxon Global Customs (TGC) product to freight forwarders following changing regulations by the Canada Border Services Agency (CBSA). The CBSA is the first Customs authority requiring direct forwarder filing, and from 12 July 2017 all forwarders deemed non-compliant may be issued with Administrative Monetary Penalty System fines. The third phase of the CBSA Advance Commercial Information program (ACI) eManifest, is part of ongoing efforts to introduce more effective risk management
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processes, making the advance electronic transmission of customs and clearance information from forwarders compulsory. TGC is described as a universal solution for airlines, handlers and forwarders to report electronically to customs authorities in over 40 countries, and is a single interface that pre-alerts users in case of missing data or errors prior to reporting. CHAMP Cargosystems vice president global sales and marketing, Nicholas Xenocostas says: “The trend to fully automated, paperless Customs makes TGC more relevant than ever.”
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Seconds with
James Muir, ACW: How has business been so far in 2016 compared to 2015? Bertsch: For last year I would like to mention two highlights, namely the start of our ULD management operations for Cathay Pacific which is our biggest customer with 25,000 ULDs, and winning the first place in IATA’s Air Cargo Innovation Award competition with our container tracking device CanTrack. 2016 has been marked by the demonstration of our customers’ loyalty in the form of ULD management contract renewals with Cargolux, SAS, Fiji Airways and Air Europa, and our repair partnership extension with Envirotainer. We have also added a number of new airlines to our customer base including Latin America’s biggest airline LATAM Airlines with their 13,000 containers and pallets. We are in the final stages of negotiations with a large network carrier for ULD management which we’ll announce later this year, and have also extended one of our largest MRO agreements with another flag carrier. James Muir, ACW: What are your expectations for the rest of 2016 and looking into 2017? Bertsch: EQT Infrastructure II is to acquire CHEP Aerospace Solutions from Brambles. This is great news for our company and for our customers and we are excited and fully committed to drive the business forward. The leadership team and our staff will remain with the company and we will also retain our head office in Switzerland as well as our operations centres and repair network in the EMEA, APAC and Americas. The rest of 2016 and the first few months of 2017 will be extremely busy for us due to the transition whilst we also keep our business running as usual. James Muir, ACW: How do airline customers benefit from outsourcing to CHEP? Bertsch: We own and manage the largest independent ULD fleet with approximately 100,000 containers and pallets which is going to grow further with the addition of new customers. This large fleet means that we can guarantee 24/7 availability to airworthy ULDs at all airports in our global network. Thanks
DR LUDWIG BERTSCH 2016 has been a busy year for unit load device management company, CHEP Aerospace Solutions, with a number of new and renewed contracts and the big news of its impending sale to EQT Infrastructure II. CEO Dr Ludwig Bertsch spoke to Air Cargo Week about what this means and how airlines can benefit from outsourcing ULD management.
to our business model of sharing assets within the pool our airline customers can reduce their ULD management operational costs by around 20% as they only pay for the units they use. All LD3 units in our fleet are lightweight containers weighing 65kg or less which is a significant sustainability and cost-saving element in our service offering. Our passenger airline customers have saved around $21 million in fuel costs and reduced their CO2 emission by around 121,000 tonnes on an annual basis thanks to our lightweight fleet.
LUDWIG BERTSCH
to fly passengers and cargo it makes sense to outsource a non-core activity such as ULD management to specialists similarly as they do with ground handling, ticketing, catering, cleaning or maintenance. Airlines continuously look for
ways to drive down costs and reduce complexity and operational hassle in their business. So a challenge for an airline represents an opportunity for us and we look forward to partnering with even more customers in the years to come.
James Muir, ACW: What unique services and innovations can you offer airline customers? Bertsch: There is quite a range! Not only does CHEP own the best-in-class MRO software ACTIS (Aircraft Component Tracking Information System) we also have a wealth of information on the total cost of ownership for every ULD type on the planet. This information helps us operate ULD management for our customers at its lowest possible cost. With regard to innovation we are embarking on a new series of field trials with customers for our award-winning GPS tracking solution CanTrack. The technology offers our airline customers the ability to collect actionable data that helps to reduce damage and claims in cargo transportation and helps support the ‘Deliver as Promised’ mantra that Cargo IQ (formerly C2K) are working towards.
James Muir, ACW: What are the challenges and opportunities of the ULD market? Bertsch: One of the main challenges for our ULD management business is the high damage ratio of ULDs at certain airports which we try to mitigate by ongoing training and education of ground handlers by our regional supervisors as the damage to ULDs does not occur while the container or the pallet is flying but when they are unloaded or stored. We are also active in ULD CARE and other industry initiatives to help drive change in this area. There are lots of opportunities for ULD management companies as currently only around 20 per cent of the worldwide ULD fleet is being outsourced. As airlines’ core business is
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DENMARK
Spirit sees more demand for high quality handling
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pirit Air Cargo Handling sees higher demand for high quality in the handling of specialised products, chief executive officer, Hans Henrik Spangenberg (pictured) tells Air Cargo Week (ACW). He says Spirit is in a market with tough competition and there is higher demand for very high quality in handling specialised products. As a handler, Spangenberg says it must have the expertise to secure this, and that educating employees is important. Spirit is investing in security screening, Spangenberg comments: “We have invested in a new security screener for fish shipments. This will be delivered to our facility in Copenhagen beginning next year. Furthermore, we expect to expand our cool/CRT facilities. Both to secure we are ready for the future demands on security screening and specialised handling.”
Screening demands are expected to increase, Spangenberg tells ACW: “We see higher demands from the authorities regarding security and customs control. The complexity is becoming larger and more tasks are expected to be solved by us. We have a good cooperation with both SKAT (Customs) and Trafik- og Byggestyrelsen (Danish CAA).” In Denmark, Spirit Air Cargo Handling is part of SAS Ground Handling Denmark, meaning it is a brand for all cargo handling activities including warehouse and freighter handling. It is also the only cargo handler offering handling at Copenhagen Airport, Billund Airport and Aalborg Airport. Spangenberg says pharma and fish exports have been increasing in recent years. So far in 2016 volumes are slightly down, Spangenberg comments: “We have seen a very small decline in tonnage from 2015 to 2016,
but the last couple of months more tonnage has been handled.” For the rest of the year, he says: “We still
DSV profits and network grow
DANISH freight forwarder, DSV is expanding its global network and has seen profits grow to 1.8 billion krone (DKK) ($267 million) in the first nine months of 2016. Revenue grew to 50.1 billion DKK in the nine month period from 38.2 billion DKK in 2015. Third quarter revenue rose to 17.2 billion DKK from 12.5 billion DKK. Nine month profit was up to 1.8 billion DKK from 1.6 billion DKK and to 692 million DKK in the third quarter from 603 million DKK in 2015. DSV chief executive officer, Jens Bjørn Andersen (pictured) says: “We are keeping momentum in the UTi integration process, and all three Divisions have delivered solid growth.” “The positive development in the third quarter is again proof that all employees across the Group are working hard to deliver good results. With aggregate earnings growth of 18% for the quarter, we are once again very pleased with DSV’s performance.”
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expect a lot of tonnage, but expect this to fall back to same level as the whole year of 2016 – with a very small decline as well.”
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The freight forwarder has been expanding its global presence, adding locations such as Mauritius to its network. Mauritius was added following the UTi Worldwide acquisition, with services including airfreight to and from Sir Seewoosagur Ramgoolam International Airport. DSV opened a new logistics facility in Prague on 26 October, with the 23,000 metre square facility covering all activities including Air & Sea. The facility employs 300 people and is near to Prague Airport. Following the UTi takeover, DSV has also established DSV Road North America, which it says through cooperation with DSV Air & Sea and DSV Solutions, will support and develop clients’ entire supply chain.
DENMARK
Second Turkish Cargo flight gives Billund a boost
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argo volumes at Billund Airport (pictured) have received a strong boost with the addition of a second weekly Turkish Cargo freighter service. Turkish Cargo started weekly freighter flights on 10 April and added a second service on 3 November 2016. The second freighter is compensating for the shortfall in capacity on Turkish Airlines’ passenger flights that have been reduced in both Denmark and Germany. Turkish Airlines regional cargo manager Denmark, Cem Kavas says: “While the Sunday operation will remain a dedicated flight between Billund and Istanbul, the Thursday flight will be shared with Vienna on a routing Istanbul-Vienna-Billund-Istanbul, also operated with our own Airbus A330-200F aircraft which will of course increase the total capacity thrown into the market.” Billund is well located not only to cater for the Danish market but also Northern Germany and Northern Europe. Kavas comments: “Cargo will be trucked into Billund from the Hamburg area, but we are also marketing our service to salmon exporters in Norway and the Faroe Islands where shipments will be sailed into harbours close to Billund and trucked into the airport for uplift via Istanbul to the 250 destinations on the route map of Turkish Airlines.” Billund is Denmark’s second largest
airport, and has been growing steadily this year. Volumes grew 15.3 per cent in October to 6,351 tonnes and by 3.1 per cent to 54,451 tonnes so far this year. As well as cargo carried on passenger aircraft, the integrators such as DHL, UPS and TNT are very important, as well as express logistics company, time:matters. Billund Airport vice president cargo, Jan Ditlevsen (pictured)
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is upbeat about continuing growth in cargo volumes, telling Air Cargo Week (ACW): “We are happy to see a healthy diversity of air cargo commodities through our airport which secures a balanced and sustained development, in contrast to being overly exposed to seasonal or cyclical variations within narrow segments.” “Our export shipments thus comprise not least of heavy industrial cargo from regional industries, electronics, perishables including salmon and a wide range of other foodstuff. Import shipments comprise of huge quantities of textiles for a substantial number of brands located in our backyard, as well as much express cargo and, not least, growing volumes of e-trade commodities.” He adds: “E-trade is certainly growing in importance, primarily transported by the integrators, and we have all facilities as well as abundant resources for further expansion of facilities as warranted by the market.” Billund is equipped with state-of-the-art cargo handling facilities and equipment, including the largest provision of screening gear in Denmark. The airport operates 24/7 and has strong transport infrastructure both North to South and East to West on the roads, railways and harbours. Ditlevsen says cargo shipments to and from the Hamburg area will travel faster through Billund and via Frankfurt due to congestion on Germany’s highways. He tells ACW: “The geographical location of Billund Airport is ideally positioned to serve not only Western Denmark, the rest of the country as well as Norway’s seafood exporters and Southern Scandinavia – but also forwarders in the Northern part of Germany, as attested by Turkish Cargo’s freighter service.”
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GSSAs in ASIA
Christmas looking rosier with yield uptick
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hristmas is looking a little bit rosier for the air cargo industry as some indicators, including yields show an uptick, sources tell Air Cargo Week (ACW). One of the clearest and broadest signs comes from ATC Aviation’s (chief executive officer) CEO Ingo Zimmer (pictured below). “We have increased our tonnages tremendously. In the first eight months of 2016 we achieved 143,000 tons of aircargo compared with the same period last year this reflects a 15 per cent increase. “With the new airline contracts we gained meanwhile, and the trend with the existing airline
customers we expect a 20 per cent growth in tonnages for the financial year 2016,” he tells ACW. ATC’s new airline customers in 2016 (till now) are Air Serbia for the US, Air Asia X for India, Air Tahiti, TAP and Ethiopian Airlines for France, Silkway and CAL in Argentina and Silkway, CAL and Saudia Cargo in Brazil. Whilst this signal of good news is supported throughout the industry it is of particular importance to ATC. “If you take into consideration that the market tonnages from our main markets are more or less flat compared with last year this means a significant growth in marketshare,” says Zimmer. A more telling comment comes from another senior industry figure, Kales Group CEO, Peter Kales, who went as far as to say some yields were actually on the up. “From October onwards we see increased demand for capacity and big
traffics are confirmed. Overall total volumes are equal or with a small increase compared to last year, and on specific routes yields are even showing an upwards trend,” Kales tells ACW. There are two caveats though before the Christmas champagne is opened earlier, maybe too much earlier, than it should be. Kales is based mainly in Europe and all its input is based on export cargo out of Europe to global destinations. Others in the industry agree with this but less clearly and adding some caveats. “ATC Aviation Services is also affected by the worldwide drop of the aircargo yields driven by the over capacities,” was ATC’s view as expressed by Zimmer. However he went on to note a general improvement in the market is helping yields. “We can feel already that towards the end of the year the demand for space is getting much stronger and also the yields recover at least a bit,” he tells ACW.
Asia remains dynamic
The view from Asia is a tad more qualified. “The air cargo market in Asia remains dynamic. Passenger demand remains healthy and consequently we continue to see cargo capacity being added faster than air cargo demand growth,” Air Logistics Group managing director Asia Pacific, Vikram Singh (pictured right) tells ACW. “Intra-Asia, other than feeder volumes, seems weaker against capacity than before” he adds. One of the encouraging signs though is established markets remain firm whilst newer segments such as e-commerce act as a driver. “We see a considerable increase in demand for E-commerce shipments – mainly from Asia. Overall traditional commodities remained more or less stable, such as electronics, pharma, machinery, flower, plants, bulbs, vegetables, etc, etc,” Kales adds. In this general view they are supported by other players in other markets. “Most commodity groups remain stable however we are seeing b2c driven cargo (postal volumes, express and e-commerce) continuing to outpace other commodity groups. Other special cargo also continues to outpace general cargo,” says Singh. Zimmer acknowledges as well that ATC has concentrated on what he called the “vertical sales” of things such as pharma, valuable cargo and courier business. Growth spots continue to be China & India with the weakening areas being Latin America & Africa, adds Kales Group vice president, Dirk Hazenoot. Total exports from Europe – worldwide during first nine months of 2016 – have been almost flat compared to same period 2015 Hazenoot says. But “Asia (mainly China) remains very strong and we have seen growth of more than five per cent,” he adds. Others in the market do not dispute that growth is there but do have a different take.
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“We’re seeing some buoyancy in China in recent months but it does not appear sustainable,” says Singh. That is the good sign. Less encouraging is that North America is struggling with market demand having dropped three per cent although that’s small compared with the Africa market which dropped 15 per cent, Hazenoot adds. He especially mentioned South Africa as a country struggling economically but went on to say many other countries in Africa are suffering from economic and political turbulence. The examples he gave are Ethiopia, Kenya, Nigeria, Sudan. “We expect some recovery towards beginning of 2017,” he adds.
Industry remains cautious
As Kales prepares for its own little year-end rally it is cautious about next year, as indeed is most of the industry. “Markets will continue to grow, airlines expand with new (mainly passenger) aircraft deliveries, and prices remain under pressure as capacity exceeds demand on many routes,” says Kales adding the interesting codicil “However additional capacities are also needed as USA and Far East are strong buyer markets with money to spend.” “Depending on economic recovery we can expect increase in demand for example to Brazil, South Africa,” adds Kales. A similar view of the problems the industry will continue to face in 2017 was noted by ATC which does not expect a big change. Its response though is different, much less specific, to tackle them and so tap the business it believes is out there. “We have taken measurement to make our organisation lean and to focus on our core business the sales and marketing,” says Zimmer. “Airlines will be much more under pressure to keep their cargo business profitable and this is a chance for Cargo GSSAs in 2017 as well.” The Asian view as outlined by Singh is like this too but it also allows for, and offers, an explanation as to why optimism endures. “Even with stellar growth next year a capacity crunch is not visible. We expect to face continued pressure on yields,” he said. But that extra capacity is proving useful in generating new markets – which Air Logistics Group is exploiting. “Abundant Intra-Asia capacity is proving a good opportunity for feeder volumes via weaker gateways. We are careful to focus on our core airline partnerships and using these opportunities to add maximum value. We have developed smaller markets to enhance coverage and geographical leverage and again focus on adding maximum value to our core airline partnerships,” he says.
Rebound but no rally
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sian GSAs remain cautiously optimistic about the future believing opportunities may crystalise soon, according to World Alliance Group executive director, Roland Quah. Headquartered in Singapore, The WAG group’s stakeholders are members of Asia Pacific Cargo Services and network alliance partner Expolanka, a Colombo-listed conglomerate. WAG is a home-grown success story although it, like so many others, is finding the current unsettled market not the best for business – with problems that have dogged the industry for this year looking set to endure into the future. “There was an impact with slower than expect outputs for 2016. Yields were affected due to two major factors, lower crude oil price and overcapacity in Asia driving market rates down. Commission from sales have gone down in tandem with lower yields. There seems to be some rebound and stability from September, but no rally,” Quah tells Air Cargo Week. This has seemingly reached even China where “export demands from traditional buyers have gone down” Quah adds. He demurred on how this is impacting air cargo precisely saying diplomatically only
“There is a chain reaction within the Intra Asia region affecting most forms of transportation services.” Despite this, WAG for its part has focused on what it regards as its main trades Saigon to European and United States East coast points. Main commodities moved are apparel such as shoes and ready-made garments. There are also electronic consumer products such as mobile phones and note pads. “Our average uplifts are between 10-15 tons per flight on the B787-800,” Quah says. This helps explain why in the course of the coming year WAG is looking at starting new offices in Vietnam. The other place it is considering opening an office is East Malaysia. Also on the cards is more emphasis on charter brokerage. “At the moment, we have limited our services to Consultancy, Total Cargo Management and GSSA, and Charter brokerage. Increasing, we are collaborating with Hunter & Palmer for all of our enquiries in Asia Pacific with the aim of strengthening our charter brokerage services within our Asian network.” In a clarification he points out there is a lack of GSA opportunities especially from major Asian based carriers. Compounding this is the role played by large legacy carriers who operate from North Asia / China and who manages their own in-house cargo services programs especially for on-line stations. “This reduces opportunities for GSA contracts in the Asia Pacific region except for secondary air operators who are not willing to sink in heavy operating investments on out-port stations,” he says.
GSSAs in ASIA Markets open up for ECS
NEW markets have opened up for ECS Group throughout Asia following its threeyear deal with Jetstar Asia, chief operating officer, Adrien Thominet (pictured above right) tells Air Cargo Week (ACW). ECS took over as Singapore-based Jetstar Asia’s general sales agent at Changi Airport and 25 stations across its Asian network on 22 October, managing freight enquires, reservations and processes on behalf of the low cost carrier. Jetstar Asia operates a fleet of 18 aircraft and makes more than 600 weekly return flights across 25 destinations in 13 countries. Thominet tells ACW: “Winning the low cost airline as a customer can be seen as a major success achieved by our group in Asian region. This fits perfectly well with our recent acquisition in Southeast Asia’s AVS GSA Group. This thereby strengthening our position in a very vibrant and rapidly growing market.” The Jetstar contract, Thominet says, con-
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firms ECS’s legitimacy and experience in setting up a Total Cargo Management contract and is a real opportunity to develop innovative and tailor made solutions. ECS has just launched a dedicated cargo website for Jetstar and Thominet says: “Customers will be able to find the products and services offered including the network of countries Jetstar operates in Asia Pacific. The site also includes the flight schedule, frequencies and timings of services. Track and trace System, e-booking and direct access to customer’s service are provided by this new platform.” Thominet tells ACW logistics has evolved and ECS is offering new services and support to add value and growth. “The second “S” in GSSA implies outsourcing can mean marketing to business intelligence, new innovative IT system or any tailor-made services, even Total cargo management that airlines require. We can also be a strong support to create new routes.”
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EASTERN EUROPE
Gateways continue to see strong tonnage growth
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astern Europe airfreight infrastructure and connectivity has improved in recent years, which has certainly given a boost to tonnage levels and helped attract more operators. The region’s freight forwarders across Poland, Bulgaria, Hungary, the Czech Republic and Slovakia can now use gateways closer to home, rather than truck their air cargo goods from hubs in Western Europe in Frankfurt, Paris and Amsterdam. This is certainly the case in 2016 as seen in the figures produced for the first eight months of the year by the Airports Council International (ACI) Europe. Warsaw Chopin Airport is one such example and is reaping the rewards of adding a new cargo apron to handle additional freighters including the AN-124 and the opening in 2013
of a second cargo terminal. Warsaw, which handles around 70 per cent of Poland’s airfreight tonnage, posted a yearon-year (YOY) 18.2 per cent after eight months of this year according to ACI Europe, handling 44,574 tonnes and has been boosted by the growth of national airline LOT Polish Airlines. But the biggest rise has come from Prague Airport (pictured) which has upgraded its infrastructure and continues to add to its route network. In the first eight months of 2016 it handled 39,645 tonnes - a YOY increase of 46.1 per cent. Other notable movers have been Budapest Airport, which saw cargo surge YOY by 14.7 per cent in the first eight months of the year to 46,594 tonnes, while Romania’s Bucharest Airport also saw a double-digit YOY rise in the period of 12.2 per cent to 20,008 tonnes.
ACI Europe figures for the first eight months of 2016, also show there has been YOY growth of 10.8 per cent to 8,054 tonnes by Riga Airport in Latvia, 15 per cent at Sofia Airport in Bulgaria to 12,349 tonnes, 12.1 per cent at Vilnius Airport to 4,782 tonnes, while the likes of Krakow Airport and Varna Airport have seen significant increases, albeit at a lower base.
Eastern Europe is certainly on the up in terms of air cargo tonnage, and much of this is clearly down to the better connectivity through route development and building the kind of infrastructure needed to handle the latest demands of air cargo whether that is perishables, dangerous goods, e-commerce, pharmaceuticals, or just general cargo.
Bids come in for Sofia tender
LOCAL media reports claim Limak Holding, VTB Capital and Flughafen Zuerich will bid jointly for the rights to operate Sofia Airport for 35 years. In September, the Bulgarian Government extended the deadline for the tender offers by one month until 18 November due to increased interest in the tender. Limak Holding is one of the investors constructing the new third airport in Istanbul. In April, Limak won the right to finish the construction and operate for 25 years Blaise-Diagne Airport in Senegal. ASL Airlines Belgium, Czech Airlines, UPS and DHL Aviation all operate into Sofia. In the first eight months of 2016, cargo was up 15 per cent at Sofia to
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12,349 tonnes. Meanwhile, also at Sofia Airport, Trace Group Hold has signed a $3.16 million contract for the expansion of one of the gateway’s main aprons. The apron will be expanded North to provide additional stands for six business aircraft once works are completed, the Sofia-based company explains in a filing. Two tracks, 153 and 50 metres long, will be built for the ground support equipment. The deadline for the completion of the project is 190 days. In other news, Bulgaria Air has announced a codeshare agreement with Greek carrier Aegean Airlines. This will include bellyhold cargo routes between Sofia and Athens and also Varna and Athens.
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Industry Events
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ACW 14 NOVEMBER 2016
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NEWSWEEK Revenues rise in Q3 by 36% for ATSG AIR TRANSPORT SERVICES GROUP’S (ATSG) revenues increased year-on-year (YOY) by 36 per cent in the third quarter (Q3) ending 30 September to $193.3 million. The lessor says, excluding revenues from reimbursements, revenues increased 25 per cent, or $34.3 million and all of ATSG’s principal businesses recorded significant growth for the quarter. ATSG president and chief executive officer, Joe Here: “Our rapid growth remains strong across all of our businesses as our leased freighter fleet and logistics and maintenance operations continued to expand in the third quarter. “In our airlines, costs associated with expansion of our operations continue to affect the profitability of those businesses. In particular, our third quarter results were adversely impacted by premium pay to ABX
Air pilots, despite an aggressive crewmember recruiting program and rigorous training schedule. “We estimate that this additional compensation, along with ongoing training, negatively impacted our pre-tax results by approximately $6.5 million for the third quarter.” Through nine months of 2016, ATSG’s net earnings were $21.8 million, compared with $25.8 million in the same period last year. Adjusted net earnings were $25.6 million, compared with $25.8 million last year. Revenues through nine months increased 25 per cent to $547.2 million, and were up 19 per cent excluding revenues from reimbursements. And adjusted EBITDA for the first nine months of 2016 was $155.4 million, up 11 per cent.
Demand high in and out of Saudi
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audia Cargo is at the forefront of air cargo in the Middle East and is certainly not stopping here as it looks to expand further. The carrier’s vice president for commercial, Rainer Muller (pictured) puts much of this positive growth down to its vast network as Saudia is now offering a huge variety of destinations in Africa, South-east Asia, China, the Middle East and Europe. Muller notes many of these routes have a widebody passenger belly product and are also being operated with freighters at a high frequency rate. Like the other Middle Eastern freight carriers considered in this feature, Saudia Cargo is aiming to further grow its fleet and its network. Muller explains: “The capacity expansion of Saudi Airlines Cargo is mainly driven by the demand into and out of Saudi Arabia,” says Muller, adding: “However, the influence on the overall yield is limited.” With regard to the nature of the offering, he remarks: “Quality improvements are deter-
mined by changing customer requirements as well as by internal optimisation processes. Almost every year, all major products are seeing re-launches with optimised processes, in addition to investments such as better equipment; in the end, this results in better quality.” Moreover, Muller continues: “All products are continuously being enhanced and adjusted, as per changing customer requirements. The main focus is on pharma, perishables transit and fashion. Plus, the schedule is further being developed based on changing cargo flows and overall economic development. “In addition, we are also in the process of improving the infrastructure of our three main airports in Riyadh, Jeddah, and Dammam, which will have state-of-the-art terminals expanding Saudia’s capacity.”
PEMCO delivers 17th SF conversion
PEMCO World Air Services (PEMCO) has announced the redelivery of another B737-300 passenger-to-freighter converted aircraft to China-based SF Airlines. SF Airlines is a leading courier in China providing delivery service to over 15 countries, including the US. The latest redelivery marks the 17th B737300/400 PEMCO-converted aircraft to SF Airlines.Theaircraftmodificationwasperformed by its partner STAECO in Jinan Shandong, who is in the process of converting two more aircraft
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to be added to SF Airlines’ cargo fleet by year-end. PEMCO director of conversion programs, Mike Andrews says: “We’re proud to see the continued growth of SF Airlines, and honoured our converted aircraft contribute to the company’s successful cargo business.” SF Airlines’ new B737-300 PEMCO-converted aircraft features nine pallet positions, and with up to 43,100 pounds of payload, 4,600 cubic feet of total volume, and a max range exceeding 2,000 miles.